French bank Societe Generale's net income fell less than expected in the first quarter, as profits on equity derivative sales offset weaknesses at its retail bank and in fixed-income trading.
French banks including SocGen have not benefited as much from the rise in rates because of the high cost of deposits in the country. Their shares have underperformed, although analysts expect the lenders to do better when rates fall. This offset a 17% fall in sales from trading in fixed income and currencies, underperforming the average of Wall Street firms and French rival BNP Paribas.SocGen said it continued to suffer from a costly hedging policy aimed at protecting the bank against low rates but which backfired. It cost SocGen €300m in the first quarter, on top of €1.6 billion in 2023.
According to a recent study by UBS, French deposits were the most expensive in Europe when rates were negative. But they increased in cost just as quickly as the European average when rates and inflation rose.